Get through the Series A crunch? Check. Move into online advertising? Check, check. Sign up big publisher? Check-plus.
Boston-based Placester is moving up in the world of real estate startups. The company said today it has raised a $5.5 million Series A funding round led by previous investor Romulus Capital. Angel investors also participated in the round, which brings Placester’s total funding to about $8 million.
That’s peanuts compared to the finances of public companies like Zillow and Trulia. Yet those online real estate giants would be wise to pay attention to the upstarts.
Placester got started in 2009 with the idea of making software for real estate agents to design and run their own websites. It made money with a $45-a-month subscription model, but a clear ceiling exists in that market: there are about 1 million agents in the U.S. So the company and its investors have had their eye on a much bigger pie: the $13 billion-ish real estate advertising market.
To that end, Placester has rolled out a new advertising product for media publishers. It’s a software platform that connects local publications with real estate agents who want to advertise properties. The startup’s first big customer is Hearst, the newspaper and media conglomerate. (The Connecticut Post and other Hearst-owned papers are using Placester to run their real estate sections—see screenshot.)
“We’re providing the infrastructure and product for anyone with a local audience,” says Placester CEO Matt Barba (pictured at top), who worked as a real estate agent in college.
As Barba sees it, real estate professionals “control a massive chunk of ad dollars,” but most publishers lack the digital tools to make it easy to place real estate ads. Placester hopes its software, plus its network of agents (nearly 100,000 by the company’s count) and newer relationships with publishers will translate into advertising gold.
“There’s an emerging battle around how are digital ad dollars being spent, and who are they being spent with?” Barba says. “We want to win that.”
Interestingly, Placester is taking a traditional, local approach in that it’s trying to connect real estate professionals and publishers in a given area—the way agents used to take out ads in the local paper. That’s as opposed to real estate destination sites, like Zillow, Trulia, and Realtor.com, which have taken off by attracting large audiences nationally.
Placester clearly sees an opportunity to take some ad dollars away from them, even as those top three sites get about a third of all real estate-related Web traffic. But it’s easier said than done; many a startup has fallen on its face trying to hook up local advertisers with publishers. The hope is that real estate is different, and has a more focused audience.
One challenge for Placester is to make the transition from having lots of small customers paying $45 a month to landing a few big customers who are paying a lot more. That will require shifting the company’s sales and support culture, Barba says.
Placester currently has 31 employees, and Barba says the company is “going to hit low 40s by the end of 2014.” The startup is part of a group that went through Techstars Boston in 2011 and includes GrabCAD, EverTrue, Kinvey, and The Tap Lab.
The bigger picture for that group, Barba says, is to figure out “how do you aggressively scale and create that trajectory and go big?” As he puts it, his company is “really dedicated to building something big, because it’s needed for our industry.”
